Inox Wind Limited – CRISIL upgrades Outlook to Positive, Reaffirms ratings for long term & short term bank facilities

Long Term Rating CRISIL A-/Positive (Outlook revised from ‘Stable’ and Rating Reaffirmed.

Short-Term Rating CRISL A2+ Reaffirmed.

Noida, May 18, 2018: Inox Wind Limited, India’s leading wind energy solutions’ provider, is pleased to announce that CRISIL has upgraded its outlook for the Company to ‘Positive’ from ‘Stable’ earlier. Additionally, they have reaffirmed ‘CRISIL A-’ rating for Company’s Long Term Bank Facilities and ‘CRISIL A2+’ rating on both the Company’s Short-term Bank Loan Facilities and for Rs.600 Crore Commercial Paper.CRISIL’s rationale for upgrading Inox Wind’s outlook reflects CRISIL’s expectation of an improvement in business risk profile, to be driven by higher revenue and cash accrual from execution of auction-based orders and continued support from the Parent. The upgrade in outlook and reaffirmation of ratings reflects Inox Wind’s market position in the auction regime, focus on cost efficiencies, healthy auction based order book and robust execution capabilities.

ABOUT INOX WIND:

Inox Wind is India’s leading wind energy solutions provider servicing IPPs, Utilities, PSUs, Corporates and Retail Investors. Inox Wind Limited (IWL) is a fully integrated player in the wind energy market with three state-of-the-art manufacturing Plants in Gujarat, Himachal Pradesh and Madhya Pradesh. The Plant near Ahmedabad (Gujarat) manufactures Blades & Tubular Towers while Hubs & Nacelles are manufactured at the Company’s facility at Una (Himachal Pradesh). The integrated manufacturing facility at Barwani (Madhya Pradesh) manufactures blades, towers and will manufacture nacelles and hubs as well. The facility at Madhya Pradesh which is amongst the largest in the world has doubled Inox Wind’s manufacturing capacity to 1,600 MW per annum.

Inox Wind offers complete end to end solutions from concept to commissioning. Besides manufacturing and supply of WTGs, Inox Wind offers services including wind resource assessment, site acquisition, infrastructure development, erection and commissioning, and long-term O&M of wind power projects.

Devansh Jain: Flying with the wind

The Inox Group had no expertise in renewable energy, but backed by a successful IPO, third-generation scion Devansh Jain proved that there is profit in the sector

No one can accuse Devansh Jain of false pride. In March 2015, the 28-year-old third-generation scion of Inox Group led one of the biggest initial public offerings (IPOs) that India has seen in the last two years. His company, Inox Wind, the renewable wind energy solutions provider, raised Rs 1,000 crore and was oversubscribed 18 times. “We have a market cap of almost a billion-and-a-half dollars,” says Devansh, who, as director of his company, is the youngest family member to hold a position in the chemicals-to-multiplexes Inox Group.

No one can accuse Devansh Jain of false pride. In March 2015, the 28-year-old third-generation scion of Inox Group led one of the biggest initial public offerings (IPOs) that India has seen in the last two years. His company, Inox Wind, the renewable wind energy solutions provider, raised Rs 1,000 crore and was oversubscribed 18 times. “We have a market cap of almost a billion-and-a-half dollars,” says Devansh, who, as director of his company, is the youngest family member to hold a position in the chemicals-to-multiplexes Inox Group.

When he returned to India from the US in 2007, he shadowed his father Vivek (managing director, Gujarat Fluorochemicals Limited) for two years before deciding to enter the renewable energy sector. Neither his father nor his uncle Pavan (chairman and managing director of Inox Air Products) had prior experience in this sector. But the Inox Group was looking to diversify, and given India’s energy deficit and the global thrust towards cleaner forms of energy, Devansh convinced his family of the power of wind.

With a corpus of Rs 40 crore borrowed from Gujarat Fluorochemicals Limited, he started Inox Wind in 2009, at a time when major players like Suzlon and Bharat Forge were stumbling. And in five years, he steered the company onto the path of profitability—a rarity among local wind energy firms. A strong current order book of 1,200 megawatts (MW) and investor confidence place Inox Wind, and Devansh, in a sweet spot. He is confident of its continued success. “Inox Wind is set to become the most profitable company in the ($4 billion) Inox Group this fiscal,” he tells Forbes India.

Devansh believes he cannot afford to fail because of the robust reputation that the Inox Group enjoys. “Some people may say, ‘You are born with a silver spoon, but it is very easy to lose it all in the third generation,” he says.

One of the biggest challenges he faced was an unanticipated policy shift: In 2012, barely three years after Inox Wind was set up, the then Congress government withdrew key benefits, including a generation-based incentive.“Renewables is something that is driven by policy and political intent. But from 2010-2013, there was policy paralysis in the country. Infrastructure was dead, and wind is clearly a part of infrastructure,” he says.

Initially, the name ‘Inox’ worked against him because of its strong branding in the entertainment industry through its multiplex arm, Inox Leisure.“We had to convince them (investors) that we were a technology company with the infrastructure in the heavy duty wind power industry,” says Devansh.

There were other teething problems, too, such as getting industry specialists to join the company, acquiring a massive land bank, getting the right technology, executing projects and building a brand in the market.

Not one to be bogged down by challenges, Devansh decided to ride out the storm. “Failing was never an option for me” he says.

In retrospect, he feels that what helped him achieve this success was his decision to improve cost efficiency, have a lean team, constantly renegotiate the supply chain, and look at anything and everything which spells profitability. “It’s about passion, focus and hard work,” he says.

So far, analysts have been positive about Inox Wind. A 2015 Motilal Oswal report on the company notes that its “strong relationship with independent power producers (IPPs) and global technology leaders, coupled with a ready pipeline of project sites and strategically located manufacturing units, have enabled it to benefit from the wind market revival”.

Devansh is excited about the future given the present government’s focus on renewable energy. “We are doing a lot of projects in Madhya Pradesh and Gujarat, and a few in Andhra Pradesh and Rajasthan this year.” Apart from these, Inox Wind is building a massive wind turbine complex in Madhya Pradesh. “It will be one of Asia’s largest blade plant in terms of size and production capacity. We intend to keep growing this business 15-20 percent year on year,” he says.

He’s already looking for the next big opportunity. “I think Inox Wind has reached a stage where it is very strong and the management team is rock solid. It is virtually on autopilot. So now I am trying to figure out what’s going to be the next avenue for me to build on,” he says.

This Jain sure knows how to turn the wind in his favour.

It's a Breeze

INOX WIND: RANK 167

Renewable energy, especially wind power, is riding a strong tailwind. Ever since the NDA came to power at the Centre, it has emphasised on reducing the dependency on conventional sources of energy and, instead, has worked towards increasing output of renewable power. And, the focus on non-conventional ways to generate electricity has provided the much-needed fillip to wind energy companies, including Noida-based Inox Wind, which makes wind turbine generators and provides turnkey solutions for wind power projects. It has a robust order book of 1,220 MW as on June 2015, with turnkey projects contributing 60 per cent and equipment supply orders making the rest. Its clients include independent power producers, utilities, public sector units and Corporates such as Tata Power, Continuum Wind and CESC.

The company's two units, one at Una, Himachal Pradesh, and the other at Ahmadabad, which has tied up with Austrian wind major AMSC to manufacture 2MW wind turbine generators, has the capacity to produce 800 MW. Once the third unit in Madhya Pradesh starts operations, Inox's annual capacity will be 1,600 MW. It is also focusing on increasing land bank across wind-rich states.

Founded in 2009, Inox has already made significant strides in recent years. Its revenues have grown at a staggering CAGR of 60.35 per cent over the past two years from Rs 1,005 crore in 2012/13 to Rs 2, 558 crore in 2014/15, while net profits have nearly doubled from Rs 148 crore in 2012/13 to Rs 332 crore in 2014/15. Earlier this year, Inox went public with a Rs 1,020-crore IPO that was oversubscribed by 18 times.

Inox now looks into the future with hope. One, the government has set an ambitious target of 60 GW of installed wind energy capacity by 2022, up from 23.8 GW in July 2015. "Inox will introduce newer, technologically advanced products, which yield higher energy at lower costs, thereby increasing the return on investments. It has sufficient land bank for the installation of an aggregate capacity of more than 4,500 MW," says Devansh Jain, Director, Inox Wind. Besides gaining from manufacturing of turbine generators, Inox has the expertise to offer end-to-end solutions.

With renewable energy becoming more viable, the central and state governments are also supporting its production by launching a series of measures. Some measures include accelerated depreciation on wind power assets, generation-based incentives, inclusion of wind power projects as CSR activity and doubling of the National Clean Energy cess. These initiatives will benefit Inox in the years to come.